On the mind of Fred Smith

Fred Smith, chairman and chief executive officer of FedEx Corp., in an April 10 speech pushed back against those saying that new flight-and-duty time rules for passenger airline pilots should apply to cargo airlines too. Calls for the change have become louder after investigators looking into a UPS Cargo plane crash in Alabama last year learned the pilots were extremely fatigued, although fatigue hasn’t been determined yet as the cause of the crash.
The Federal Aviation Administration recently stiffened hours-of-service rules for passenger airline pilots, but the rules were not in effect yet at the time of the UPS accident, and they don't apply to pilots of all-cargo planes because the agency determined the costs outweighed the societal benefit. Cargo airlines can adopt the new standard if they choose.
The rulemaking particularly addressed the cumulative fatigue caused by repeatedly flying at night. FAA studies show that pilot performance substantially deteriorates after the third consecutive nighttime flight duty period.
But Smith told the International Aviation Club of Washington, D.C. that all-cargo and passenger flights “operate in different ways that make identical regulation unwise and less safe.”
Cargo pilots, for example, fly about 30 hours per month, or roughly half as many as passenger pilots, have half the landings, have longer rests between duty periods and have better rest opportunities while on duty. He noted FedEx has more than 230 dedicated pilot sleep rooms at its Memphis hub.
Smith said the FAA has the right approach with its new Fatigue Risk Management Plans, which provide a framework for developing rules customized to a particular type of operation. The new anti-fatigue rules require both passenger and cargo operators to create such plans, which should result in a data-driven approach to understanding pilot alertness in each operating environment.
FedEx, he said, has embraced risk management and has the “most advanced fatigue-mitigation system in the world.” It has built proprietary, predictive fatigue software and collected physiological data from pilots to scientifically validate what causes and mitigates pilot fatigue. The company consults monthly with its pilots and their union on the physiological effects of its schedule and makes adjustments based on that input. And it created the FedEx Fatigue Office, a special autonomous unit dedicated to pilot fatigue research and management that also offers its expertise to outside parties.
Smith said forcing cargo pilots to adhere to the same flight-duty rules as their passenger counterparts would actually “make FedEx less safe, not more, because of how they would affect some of our schedules.”
On the day of the speech a FedEx Freight twin semi-tractor trailer was involved in a head-on collision with a charter bus on I-5 in northern California after it crossed the median. Ten people, including the truck driver, were killed. Investigators are looking into human factors such as fatigue or distraction in that crash as well. Hours-of-service is a hot issue in the trucking industry after the federal government last year further restricted the total amount of hours a driver can put behind the wheel each week and expanded mandatory rest breaks. Safety groups want to further limit drivers to 10 hours of driving per day.
Smith said the inability to locate Malaysian Airlines flight 370 serves as a reminder that regulators and airlines need to adopt more technologies that could improve aviation safety.
He said flight path information available via Aircraft Communications Addressing and Reporting Systems (ACARS) could be adapted to provide continuous transmission. And the Automatic Dependent Surveillance-Broadcast (ADS-B) should be mandated worldwide.
Rapid deployment of space-based ADS-B will also allow reduced separation of aircraft over the ocean, which would enable airlines to complete trips quicker and with less fuel and fewer emissions and giving air traffic controllers better real-time information. It is the key component behind the NextGen air traffic control system that the FAA is trying to implement, but which has been slowed by budgetary and other reasons.
Peering into the future, Smith envisioned a world with “unmanned small-freighter aircraft,” but said “well-trained air crews will be required for large, commercial, all-cargo aircraft for the foreseeable future for many reasons including sociological concerns, safety and operational flexibility.”
However, the aviation industry needs to adopt technologies and practices that will make pilots more efficient as the industry faces the challenge of replacing an estimated 500,000 pilots over the next 20 years, he said.
The challenges facing the air cargo sector are more immediate, Smith said, pointing to diminished growth in recent years.
Since the global financial crisis in 2008, world GDP growth has slowed and trade is only growing at 1.5 times GDP compared to 2.5 times GDP before. Reasons include an explosion in protectionism around the world, Chinese wage inflation that is slowing exports, and rising fuel costs.
At the same time, freight carriers are impacted by continued miniaturization of electronics, which represent about half the tonnage transported by air. As electronics get commoditized, their price goes down and the lower value-per-pound decreases the desire to purchase a premium transport mode when reliable ocean carriage is available. Also, Smith said, new electronic product introductions are fewer in number these days, as some markets have reached near-maximum penetration with fewer major electronics innovations to drive new demand.
The result is that more customers are opting for lower-cost maritime transport, as researcher Seabury documented in a recent report, while door-to-door global small shipments are increasingly carried by the integrated networks of FedEx, DHL and UPS as consumers increase online shopping. The traditional air cargo market is being gnawed at by global air express on one side and sea trade on the other, Smith said.
An influx of new, wide-body passenger aircraft has added 5 to 6 percent in belly-hold cargo capacity. The combination of slower demand and increased capacity continues to put pressure on yields and more legacy freight capacity reductions will occur because of these trends, the FedEx chief said.